A key distinguishing skill of a leader is making decisions. Especially when clear, complete and valuable information is not available. More so, when your decision affects a large number of people or stakeholders. Even more so when the task is complex, scope is not within your control, has a long duration and has multiple components.

Currently we have an example of decisive leadership under extenuating circumstances shown by the California Board of Pharmacy and its Executive Officer, Virginia Herold.

This is the story of a pharmaceutical regulation that will soon go into effect in the state of California. While this post is not intended to be a discourse on drug serialization, some background is necessary to understand the supreme leadership skill that is being displayed.

This long post is intentionally split into two parts. You can read thesecond part here.

What is Serialization and what is drug Pedigree?

Think about a car. Every car has a VIN (Vehicle Identification Number). The VIN on your car can be exactly matched by the VIN in the car manufacturer’s records. The VIN for a car is the “serialized” number on every unit of a drug (vial, ampule, package, etc.).

Now think about the CARFAX reportfor a car. Among other information, the report contains history of ownership of the car. Everytime ownership changed, it is recorded on the Carfax report. The pedigree for a drug is very similar to the ownership history on the CARFAX report to a car. E-pedigree is an electronic pedigree for a drug.

The California Serialization and e-Pedigree regulation calls for serial number and e-pedigree for every drug sold in California. When the regulation is completely implemented, a patient or an inspector should be able to pick up a vial or a prescription drug package and determine whether it is counterfeit or genuine.

Complexity of the Regulation:

While annual car sales are in the region of 15 million, more than 3 billion drug prescriptions are dispensed in the US every year. Counterfeiting is rampant, eats away at the profitability of the manufacturer but most importantly, it causes patient death in some cases.

Manufacturers, wholesalers, third party distributors, hospitals, retail pharmacy and a growing number of online pharmacies contribute to a large ecosystem, thus increasing the number of stakeholders that will be impacted by any regulation

Decision taken by the California Board of Pharmacy, led by Virginia Herold, Executive Officer:

The Board has come up with a simple rule. Ensure that by January 2015 half of all the products sold in California have a serial number that can be confirmed by the manufacturer. Drug pedigree must always be available. The other half of the products should be serialized by January 2016.

All certifications should be made under penalty of perjury, ie. violations are punishable by law.

This regulation will be applied to manufacturers first, then followed by wholesalers (in 2016) and lastly by the pharmacies (in 2017).

What information is not clear or is unavailable:

The serialization and pedigree law was first mooted in 2004, by the California Board of Pharmacy and also by the US FDA. After numerous deferrals we are at a point where the US FDA needs Congress approval to enact the law. California is going ahead and launching the regulation in a phased manner.

The following questions are still being worked out:

a. How is the serial number on a case related to the numbers on each of the units within the case?

b. How exactly is the 50% of product that is sold in California, calculated?

c. Most manufacturers use a third party distributor to ship their drugs. They will not know when the unit is manufactured or which units will be sold in California.

d. What will happen if the inspectors pick a vial for inspection and it is not serialized? What steps should the distributor follow?

e. What will be the US FDA’s approach to serializationand whether that would supersede the California legislation? After all, a national law would be much more comprehensive, powerful and be able to be consistently applied than individual state laws.

In the next part we will talk about our analysis of the Board’s decision and the leadership lessons that can be drawn from this exemplary decision. We will also look at a contrasting example where we wish the decision makers had waited for more “perfect” information and not rushed the decision.